06/18/2006

Special to the Record-Eagle
Contractors will spend an estimated $2 million reconstructing four septage treatment buildings grouped on the right after the wall of the membrane bioreactor building (1) blew out, destroying the back of the dewatering building (2). An inspection blamed the collapse on missing structural steel in the membrane tanks. Inspectors also determined similar structural problems in the partially buried equalization tank building (3) and the above-ground sludge digestor tanks. The membrane tanks were rebuilt, but repairs still must be made to the equalization and sludge tanks. The truck-unload building (5) was the only part of the plant not affected by the collapse.

A year later, collapse leaves financial sinkhole

By Brian Mcgillivary

bmcgillivary@record-eagle.com

TRAVERSE CITY — A year ago today pressure from 150,000 gallons of partially treated sewage buckled and crumbled a wall at Grand Traverse County's month-old, multi-million dollar Septage Treatment Plant.

Sewage from regional septic tanks escaped in a wave that revealed numerous flaws and in effect washed away a facade of competence from the people who devised, designed, built and were paid to oversee the $7.8 million state-of-the-art project.

The collapsed tank has been rebuilt and is undergoing testing, but repairs continue on two other tanks with similar flaws. Most of the facility on Ahlberg Road in Garfield Township remains closed until at least August, a financial sinkhole that won't be filled by septic haulers alone.

"The one good thing about all of this is if the wall hadn't fallen down we wouldn't have known about all the other problems," said East Bay Township Supervisor Glen Lile.

Lile's reach for the positive on the collapse echoes initial reactions a year ago from a group of local bureaucrats and elected officials.

As they awaited an explanation as to the cause of the collapse, township supervisors, county officials, and city manager Richard Lewis of Traverse City discussed trying to "spin" the collapse and get the word out that things weren't as bad as they seemed.

Officials eventually hired engineering firm NTH Consultants to examine the entire complex. NTH proved things weren't as bad as they seemed: Indeed, problems were far worse than imagined.

Subcontractor Farrington Construction left out almost 1,000 pieces of structural steel from concrete tanks that hold hundreds of thousands of gallons of sewage. Much of the steel that was installed wasn't properly placed in concrete, which reduced tank wall strength in some instances and made walls prone to cracking in others.

An engineer for the facility's design firm, Gourdie-Fraser Inc., of Traverse City, later acknowledged he didn't know of the existence of a higher industry standard than the one he used for pouring concrete walls for sewage treatment plants.

NTH said many problems were due to poor quality control during construction. Traverse City's The Christman Co. was the project's general contractor.

Project manager Michael Houlihan, a local attorney who for decades has worked as the county Board of Public Works' legal counsel, said if he had it to do over he'd require independent outside inspections from the project's outset, and would have had peers review plant design.

"Though it's very expensive, as we have seen it's worth the money," he said.

Convoluted system

Gourdie-Fraser/Christman and Farrington Construction ultimately accepted responsibility for construction and design flaws. Government officials, however, for months have danced around culpability, aided by a convoluted organizational system.

The Grand Traverse County Board of Trustees sold bonds to build the plant. The county Board of Public Works, appointed by the county board, hired the contractor and project manager and legally makes official decisions regarding the plant.

At the bottom of legal authority is the water and sewer committee, comprised of the supervisors of Elmwood, East Bay, Garfield, Peninsula, and Acme townships. Blair Township recently joined that group, which also includes a representative of the county board and the city manager for Traverse City.

Those townships have sewer systems administrated and maintained by the Grand Traverse County Department of Public Works. The townships pay 100 percent of the department's costs.

The townships also guaranteed the plant's bond payments, and some contend they own the septage treatment plant, though township officials technically have no decision-making authority. They are a recommending body to the county Board of Public Works.

BPW chairman Doug Mansfield recently was asked if the BPW was a rubber stamp for the water and sewer committee. It appears that way, Mansfield acknowledged, but said "it won't be anymore."

Former BPW chairman Bob Russell contends the BPW is responsible for the mess and failed in its role to properly administer the project and its financing.

Cronyism allegations

Allegations of cronyism dogged the project from the beginning.

Contract winner Gourdie-Fraser of Traverse City has been the DPW's engineer for almost 40 years and wrote the county's request for proposals. At the time, Gourdie-Fraser also served as engineer for most of the townships represented on the water and sewer committee.

"They were the county engineers, had no experience, weren't the lowest bid and still got the job," said Acme Township Supervisor Bill Kurtz. "What does that tell you?"

Spence Brothers Construction of Traverse City sought the septage plant project contract, the company's Bob Spence said. He said he heard rumors the job was Gourdie-Fraser's for the taking, but Spence Brothers bid anyway.

"We either discounted it or thought we had a good enough team to get past it," Spence said.

Doesn't pay for itself

Repairs won't be completed at least until August, and the plant won't be fully operational until October, said Christman Co.'s Scott Jones. The plant remains closed, though it accepts local septage by flushing it down a drain to Traverse City's sewer plant.

Pre-construction estimates devised by Gourdie-Fraser and Houlihan in 2002 indicated that fees generated from septage delivered by local haulers would pay for plant construction and operation.

But those predictions were far from correct.

The plant doesn't pay for itself and currently receives a little more than half the septage volume it needs to pay the bills, said DPW director Chris Buday.

Acme's Kurtz said the plant isn't financially competitive and he wants to sell it now at a loss. The plant lost $215,000 in 2005 and currently owes more than $330,000 to creditors, with just $124,000 in the bank to cover bills.

The plant also has to cover annual bond payments of about $600,000 a year.

Russell said the water and sewer committee and DPW should have known user fees alone could not have paid for the plant. There wasn't enough septage volume to begin with, and high septic pumping fees discourage homeowners from pumping.

"It creates a death spiral," Russell said. "No one ever thought it would work this way."

The county came up with cost and operational estimates in the late 1990s, as officials considered building a septage plant. Russell said he proposed to the water and sewer committee a special assessment on residential and commercial septic tanks.

It's the only fair, rational and practical way to fund the plant, but the townships wouldn't even consider it, Russell said.

"Special assessment is the only way it will really work and they shouldn't have built the plant if they weren't going to properly fund it," Russell said.

For his part, Houlihan said he erred by not recommending the county borrow more money to help cover the first couple of years of plant operations. In two or three years septage hauling fees will be sufficient to fund the plant, he contends.

The water and sewer committee is studying various ways to fund the plant, including surcharges on new septic tanks, borrowing $500,000 from the county, or accepting forms of industrial waste.

In a worst-case scenario, the county could require the bond payments be met by drawing from the townships' general funds.

Peninsula Township Supervisor Rob Manigold agreed a special assessment or millage would be the best way to fund the plant, but such a move won't fly politically in northern Michigan, he said.

"All the public comment we've received does not support a millage or special assessment," Manigold said. "(Russell's) right, but you can't sell it."